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HARRISBURG - The uneasy relationship between the Pennsylvania Lottery and the state's casinos is entering a new phase with Gov. Tom Corbett's push to privatize management of the lottery.

The impact of having big-time gambling on the lottery was heavily debated prior to the 2004 state law legalizing slots casinos. Since the first casinos opened, Harrisburg has kept a watchful eye on the competition between the lottery and casinos for the public's discretionary betting dollar.

The rivalry has consequences for public policy since Pennsylvania relies on lottery revenue to support a range of benefits for senior citizens and on casino revenue to provide local property tax relief.

The lottery generated more than $1 billion last year for senior programs, including low-cost prescription drugs and property tax and rent rebates. More than $700 million in casino revenue was available for property tax relief last year.

The long-standing concerns over whether the casinos would hurt lottery ticket sales led to a requirement in the slots law for annual reports examining the potential impact. The latest report presents a mixed picture.

Lottery sales have remained stable despite the rapid growth in casino gambling, according to the 2012 report by the Legislative Budget and Finance Committee. Casino gambling appears to have slowed the growth of lottery sales in counties where the 10 casinos are located compared to sales in counties without one, the report added. However, this trend may be due to lottery customers in urban areas shifting from terminal-based games to instant ticket games.

"The lottery staff believe lower lottery sales in host counties may have more to do with the general trend of lower sales for terminal-based games than to the presence of a casino," wrote committee director Philip Durgin. ï»¿Meanwhile, casinos are required by law to sell lottery tickets to patrons.

The plan by Camelot Global Services PA LLC to generate more lottery revenue by getting more people to participate and adding keno and online games is creating new concerns for some lawmakers. Mr. Corbett said the reason for awarding a management contract to Camelot is to increase lottery revenue for senior benefits as that segment of Pennsylvania's population grows. Senate Republican leaders are not happy with the contract.

They want the contract rewritten to exclude interactive video games or simulated slots or table games as potential lottery offerings.

In a letter to Mr. Corbett, President Pro Tempore Joseph Scarnati, R-25, Jefferson County, and Majority Leader Dominic Pileggi, R-9, Chester, and three other senators expressed concern the contract will allow for unlimited types of Internet and monitor-based interactive games.

"Not only is this a broader expansion of gambling that has been described, but these games will directly compete against our highly regulated casinos," they wrote.

"Each of the casino operators has spent $65 million to become licensed, withstood rigorous background checks, has 24-hour state police oversight, pays a 55-percent to 60-percent tax and has invested billions of dollars to build their industry," the senators added.

The senators are considering whether legislation is needed to ban lottery interactive games.

Corbett administration officials have said a bright line exists under state law between lottery games and casino games.

Contact the writer: rswift@timesshamrock.com

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